Jump to content

WEB on CBS Sunday Morning


Recommended Posts

Personally, I think that what matters is always total debt. And total debt as a percentage of GDP has never been higher than today in peace time. After WWII total debt was more or less 160% GDP: compare that with a total debt of 350% GDP we have today.


Let’s say a family pays a 5% interest on its debt and its debt amounts to 3.5 times its revenues. Each year that family must pay 5% x 3.5 = 17.5% of its revenue in interest alone. Compare that to the US personal saving rate which today is 3.6%. If savings = investments, it means that we spend (Europe is the same, actually even worse!) almost 5 times more in interest than we invest. I don’t know if a family can prosper that way… What I know is that, if a business were to use its capital that way: spend on interest payment 5, invest 1; it would be very well on its way to bankruptcy.




Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Create New...